investment ISA advise needed

gtmoon

have been looking at this in the past week, but still confused on the annual return, charges etc.

when putting into ISA, i am prepare to put the money away for a long time (3yrs +). so am trying to compare the annual return of cash and investment ISAs.

have read the article dated 2004: Funds and ISAs: the cheapest way to buy them
http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1080463348,20132,

also been to Halifax
http://www.halifax.co.uk/isas/investmentisa.asp
No initial or exit charges and a yearly management charge of no more than 1.5%

which seems reasonable return of at least 6% p.a., but not sure about the yearly management charge.

SeanW

I don't think you can make any useful comparison.

There are many different Cash ISAs paying many different rates, and an investment ISA is just a tax free wrapper for 1000s of different investments, which can all go up and down in value.

You could, I suppose compare say Halifax Cash ISA to the past of one of Halifax's portfolios of ready made investment ISAs, but that's just comparing the past, and nothing is guaranteed for the future.

The management fee will be what you pay to Halifax for managing the fund, and depends on how big your investment is in the fund(s).

Three years is too short for the stock market unless you are prepared to take the risk, and you'd be better in a cash ISA such as NS&I Direct.

dunstonh

when putting into ISA, i am prepare to put the money away for a long time (3yrs +).

Thats short term. 5 years plus is medium term with 10 years plus being long term.

also been to Halifax
http://www.halifax.co.uk/isas/investmentisa.asp
No initial or exit charges and a yearly management charge of no more than 1.5%

which seems reasonable return of at least 6% p.a., but not sure about the yearly management charge.

Pretty awful fund choice though. If you use Halifax you are almost certainly destined to getting lower than average returns.

Do not let charges decide where you invest (not that Halifax are cheap anyway). You invest to make money. Not to save on charges. A medium risk investment should be looking to double figures after charges over the long term.

cheerfulcat

Hi, gtmoon,

Three years is not a long time in investment terms. Five years is the usual suggested minimum.

As to comparing cash with investment ISAs - you can't really, it's apples and oranges. Cash ISAs return your original capital + whatever interest was earned. Equity ISAs do not guarantee the return of your capital; they may increase it by many times or lose the most of it, they may pay dividends or interest ( gilts, corporate bonds )...you can really only compare equity ISAs with other equity ISAs in the same sector.

As a general rule, over the long term equities have massively outperformed cash.

which seems reasonable return of at least 6% p.a., but not sure about the yearly management charge.

I don't see 6% mentioned anywhere - can you be more specific?